A handful of FTSE 100 shares fell fairly steeply last week. And they could be offering some attractive opportunities for investors. I’m taking a look at three and pondering whether to buy.
Supermarket shock
Ocado (LSE: OCDO) shares continued their fall during the week. They’re now down almost 70% over the past 12 months. Shareholders are still well in profit since flotation, though.
The latest dip is fallout from a trading update on 13 September, in which Ocado warned us to expect “a small sales decline in FY22 and close to break-even EBITDA“.
Despite that, the company’s all-in-one online selling package, known as the Ocado Smart Platform (OSP), is doing well. It provides a robotic warehouse automation package. And by the end of the first half this year, 11 partners in nine countries were signed up.
International revenue from the OSP business more than doubled in the half too.
The problem for me is that the bulk of Ocado’s revenue still comes from retail. The OSP business might have years of strong growth ahead of it. But I just don’t know how to put a valuation on it, so I’ll give it a miss.
Out of fashion
JD Sports Fashion (LSE: JD) shares took a dive on 22 September in response to interim results, and then slid further by the end of the week. We’re looking at a 12-month fall of 50% now.
I wonder if this might just be a return to normality. JD shares did soar during the pandemic, but then went into sharp decline in 2022. Over the past five years, shareholders have seen their investment rise by 40%, though the price is back at mid-2019 levels now.
The company’s outlook is upbeat, with early sales in the second half around 8% ahead of the previous year. JD also notes “an encouraging return to positive trading in the United States“.
Forecasts suggest a forward price-to-earnings (P/E) ratio of under 10. There’s certainly risk here, as first-half profits were weak. And a recession ahead of us won’t help.
But I find the valuation attractive, and I’ve put JD Sports Fashion on my list of buy candidates.
Cheap land?
Land Securities (LSE: LAND) had seen its shares slowly gaining in 2021. But 2022 has been less kind, as the price slid. The real estate investment trust (REIT) released an operational update on 21 September, and the market didn’t like it. The shares dipped further, and have now lost nearly 25% of their value in the past 12 months.
With the REIT now down to levels not seen since the worst of the pandemic, I’m adding it to my list of buy candidates too.
Forecasts put the dividend yield at over 6% this year. And Land Securities has a solid track record of annual dividend raises. Whether it will be able to continue that throughout the coming recession is the big risk. And if the dividend is reduced, I can see the shares falling further.
But I see a healthy long-term future for the property rentals business, and I intend to examine this one more closely.
